The U.S. House of Representatives voted 405-2 Tuesday to pass H.R. 458, a bill that would impose tighter standards on sales of insurance products to military personnel on military bases.[@@]
The only 2 lawmakers to vote against the bill are Rep. Jeff Flake, R-Ariz., and Rep. Ron Paul, R-Texas.
The Senate probably will wait until fall to act on the bill, because leaders of the Senate Banking Committee first want to see a report on military base sales that should be completed around then, according to a member of the staff of Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee.
Rep. Mike Oxley, R-Ohio, chairman of the House Financial Services Committee, is welcoming the results of the House vote on H.R. 458.
“The legislation will address this critical issue by helping to put an end to the long-standing problem of unscrupulous securities and life insurance firms which have been taking financial advantage of the men and women in our Armed Forces,” Oxley says. “There is no reason that any company selling these questionable plans can’t replace them with more reputable products as sold in the civilian market.
The American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., also are praising the vote on H.R. 458.
“House approval of this bill signals strong bipartisan support for curtailing abusive life insurance and mutual fund sales practices at military installations,” ACLI President Frank Keating says.
NAIFA “is encouraged that the bill mandates coordination with the state regulators,” says NAIFA Chief Executive David Woods. “This bill helps to free military personnel from predatory sales practices that NAIFA condemns while assuring that those who are serving our nation will have access to insurance products to protect themselves and their families.”
H.R. 458 would:
- Make it clear that state insurance regulators have jurisdiction over insurance sales on military bases within their states.
- Ban the sale of contractual mutual funds and require that military personnel be told about government life insurance programs before buying private life insurance.
- Allow military post commanders to ban unscrupulous agents from their bases and posts and forward a list of these banned agents to the U.S. Department of Defense. At the same time, it gives authority to the Defense Department to send these lists to state insurance departments for further investigation.
The Defense Department taking steps of its own to tighten up its oversight of sale of financial products to personnel on military bases.
A military base sales regulation proposed by the Defense Department would require:
- Closer cooperation between military authorities and civilian regulators, including state insurance commissioners.
- The creation of a master list of disciplinary actions taken against sales agents at military bases.
- A system for making the disciplinary action list available to legal personnel at all bases.
- Higher standards than now in force on the types of products sold, how personnel are solicited on base, and on the companies and agents that sell these products on base.
The ACLI and NAIFA both are participating in the Defense Department rulemaking process. At a recent public hearing on the proposed regulation, some insurance underwriters and agents independently voiced concern that the rules would help banks and credit unions at the expense of insurance companies and agents.